The table below offers net incremental cash flows for Fake Company Zeta. WACC for the firm is 12.5% and the tax rate is 27.5 %. What is the IRR on this project? Net Incremental Cash Flows: Year 0: ($450) million Year 1: ($50) Year 2: $125 Year 3: $178 Year 4: $188 Year 5: $205
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- Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: A. What is the payback period of this uneven cash flow? B. Does your answer change if year 10s cash inflow changes to $500,000?Company XYZ is considering an investment project that is expected to generate the following cash flows: Year 1: $500,000 Year 2: $700,000 Year 3: $800,000 Year 4: $900,000 Year 5: $1,200,000 The cost of capital for the company is 10%. Calculate the Firm's Present Value (FPV) of the cash flows. To calculate the Firm's Present Value (FPV) of the cash flows, you need to discount each cash flow to its present value using the cost of capital, and then sum up the present values of all cash flows.
- Havana, Inc. has identified an investment project with the following uneven cash flows: $0 at Year 0, $950 at Year 1, $1,180 at Year 2, $1,400 at Year 3, and $2,140 at Year 4. Assume the discount rate is 8 percent, what is the future value of these cash flows in Year 4? a) $4,167.62 b) $6,123.60 c) $5,670.00 d) $6,225.08Bates & Reid, LLC, has identified two mutually exclusive projects, A and B. Project A has a NPV of $14,050.47. Project B has cash flows as described below. Year Cash Flow B 0 -$77,000 1 35,000 2 25,000 3 25,000 4 25,000 If the WACC is 8%, then B’s NPV is _______ and therefore the firm should accept _________ $11,337.55; project B because NPVA > NPVB. $15,062.43; project B because NPVA < NPVB. $15,062.43; project A because NPVA < NPVB. The projects are equally profitable. $11,337.55; project A because NPVA > NPVB.A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 Project S -$1,000 $895.52 $240 $10 $10 Project L -$1,000 $5 $260 $400 $807.20 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
- CSY Bhd is considering a project that has the following cash flow data. What is the project's payback? Year : 0 1 2 3 4 5 Cash Flow: -RM1,000 RM 300 RM 310 RM 320 RM 330 RM 340A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 01234 Project S-$1,000$869.10$260$5$10Project L-$1,000$0$250$420$831.87 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding thefirm’s warehouse capacity. The relevant cash flows for the projects are shown in the following table. Project X Project Y initial investment (CF0) $500000 325000 Year(t) Cash inflows (CF0) 1 $100000 $140000 2 120000 120000 3 150000 95000 4 190000 70000 5 250000…
- A company is analyzing two mutually exclusive projects, with the cash flows below. If their WACC is 8.5%, what is the IRR of each? Strictly based on IRR, which project should the company go with? Time Project A Project B 0 -$1,000 -$1,000 1 $870 $0 2 $250 $250 3 $25 $400 4 $25 $845Kabul Storage is considering a project that has the following cash flow data. What is the project's IRR? If the company’s cost of capital is 12% should the project be accepted? Explain. Year 0 1 2 3 Cash flows -$1,100 $450 $470 $490Bell Manufacturing is attempting to choosethe better of two mutually exclusive projects for expanding the firm’s warehousecapacity. The relevant cash flows for the projects are shown in the following table.The firm’s cost of capital is 15%. project X project Y initial investment 500000 325000 year cash inflow cash inflow 1 100000 140000 2 120000 120000 3 150000 95000 4 190000 70000 5 250000 50000 a. Calculate the IRR to the nearest whole percent for each of the projects. b. Assess the acceptability of each project on the basis of the IRRs found in part a. c. Which project, on this basis, is preferred? (solve using excel)
